Sen. Klobuchar: Listen to Beginning Farmers Over Banks

Erik Tryggestad • June19,2017

I live with my family and raise fruits and vegetables in Oronoco, Minn. As a beginning farmer, I understand the need for access to credit and think that Farm Service Agency(FSA) loans are critical to the farm economy, as they allow loans to be given to smaller or beginning farmer when banks don’t want to lend to them. As a small farmer, I also see the need for these loans to have limits. Otherwise, banks would likely lend the entirety of the set pool of money to the largest farms over operations managed by small and beginning farmers like myself. Of course, that would defeat the whole point of the program.

There are currently two FSA loan programs: direct loans where the government itself lends you the money, and guaranteed loans, where a bank lends the money with the government guaranteeing payment. Currently, the limit on FSA direct loans is $300,000 each for operating loans and ownership loans used to buy land. With rising land prices, beginning farmers need this limit to be raised so they can purchase land and start new farms that are vital to our communities. Yet there is no reason to raise the limit for FSA guaranteed loans, which are already high at $1.39 million.

Therefore, I was surprised to see that Minnesota U.S. Senator Amy Klobuchar, who is usually a champion of beginning farmer issues, cosponsored a bill last year (S.3229) that increased FSA direct loan limits, but also almost doubled the limits on FSA guaranteed loans, raising them to $2.5 million for both ownership and operating loans. The average FSA guaranteed loan size in Minnesota during 2016 was only $282,447 for operating loans and $434,336 for ownership loans, nowhere close to the current limit of $1.39 million.

What kind of farms are asking for taxpayers to guarantee loans over $1.3 million? These large loans aren’t for beginning farmers, but a way to allow big banks to provide the biggest operators with even greater funding than they already do, leaving taxpayers on the hook for all the risk. This allows mega-farmers and corporate-backed confinement livestock owners to expand even more, driving up land prices and giving them an unfair advantage over beginning farmers like myself.

Why is Senator Klobuchar listening to banks over the interests of beginning farmers who need this money? After organizations like the Land Stewardship Project and Minnesota Farmers Union raised objections last year, the bill did not move forward, yet I hear that Sen. Klobuchar is still planning on cosponsoring a similar bill that could appear in Congress any day. Why doesn’t she drop the idea of raising the limits on FSA guaranteed loans and focus instead on direct loan limits?

Farmers’ access to credit is important, but taxpayers shouldn’t back banks’ multimillion-dollar investments in risky large operations. Senator Klobuchar needs to decide if she is a champion for beginning farmers or the banks. She can’t be both.